AGL has second crack at rooftop solar market in bid to catch up with energy transition

Australia’s biggest coal generator and emitter AGL Energy has made a second major move into the rooftop solar market, this time targeting the booming commercial solar sector with the acquisition of two major players in that market, Epho and Solgen Energy Group.

ASX-listed AGL said on Tuesday that it had entered into agreements to buy Epho and Solgen – the latter from current owner Anchorage Capital Partners – to “complement and strengthen” its existing solar capabilities.

Epho and Solgen rank among the top five commercial rooftop solar installers in the country, which should be enough to propel AGL above its rival Origin Energy as the major incumbents seek to replicated their dominance in centralised generation in the new distributed energy market.

It won’t be easy. The latest purchase follows a previous and not so successful attempt by AGL to establish a firm beach-head into the rooftop solar market when it bought Rezeko, which it disbanded in 2018 along with its then “new energy division”. Now it is trying to re-enter the “behind the meter” market with new rooftop solar and electric vehicle offerings.

“These acquisitions are another step in AGL’s energy transition and a clear example of how we are responding to the accelerating market forces of customer demand, community expectation and the development of technology,” AGL CEO and managing director Brett Redman said in a statement.

“With these acquisitions, we will have the systems and technologies in place to deliver more than 70MW of commercial solar each year, providing a combined revenue of over $150 million per annum.”

The move by AGL follows the February announcement of a massive loss in the December half, delivered alongside promises to urgently rewrite the company’s business strategy to better respond to a rapidly changing market.

As RenewEconomy reported at the time, the energy juggernaut remains heavily dependent on revenue streams from three massive coal plants and had thought those profit streams would allow it to adapt to the energy transition in its own good time. But this is being undermined by the rapid uptake of renewables, and rooftop solar in particular.

Redman, who took the helm at AGL in 2018, has conceded that AGL needs to take a different approach to trading and portfolio management and to accelerate its response.

“This part of the energy sector has seen significant growth over the last 10 years, as businesses right across Australia seek out solar offerings to help them decarbonise, reduce costs and create sustainable operations,” Redman said this week.

“AGL has achieved good growth in this part of our business over recent years, already offering our business customers a range of options including solar installations, energy storage, microgrids, standalone power systems and other energy efficient technologies.

“We can now provide even more options, value and convenience for our business customers,” he said.

Solgen, which was founded in 2008 and bought by Anchorage in 2015, has established itself as one of the largest commercial solar providers in the country, with many notable megawatt-scale projects to its name, including the 1.17MW Adelaide Airport solar system.

NSW-based Epho was founded more recently, in 2014, but has quickly established an impressive track record, with more than 400 projects under its belt, including the massive solar rollout for retail giant Aldi and one of Australia’s largest community solar projects, the 1MW Majura solar farm in the ACT.

Epho has also co-developed proprietary technology called Bright Thinkers Power Station which, as One Step Off The Grid reported here, allows commercial and industrial rooftop PV systems to be connected both behind-the-meter as well as independent, market registered power stations.

Epho managing director Oliver Hartley said on Tuesday that backed by AGL, Epho would be able to provide the full suite of on- and off-site renewable energy retail solutions required by its clients to achieve their environmental commitments.

“We can make a material difference to the carbon foot-print of corporate Australia,” Hartley said.

Solgen Energy Group CEO David Brown said the acquisition by AGL provided an exciting opportunity for the company to grow.

“This will allow us to provide more customers with best-in-market commercial energy solutions throughout Australia – this group will play a leading role in the future of the broader, national solar energy market,” he said.

Anchorage Capital Partners also appears to be pleased with the deal.

“We are delighted that AGL recognised the strategic benefit of Solgen and look forward to following its continued growth under AGL’s ownership,” said Anchorage Capital Partners chairman Phil Cave on Tuesday.

Related reading: Epho and Solgen: Is this the solar market consolidation Australia had to have?